SPREAD-BETTING used to be largely the preserve of thrillseeking City traders, taking punts on anything from the ups and downs in the FTSE 100 index of leading shares to fluctuations in oil prices, or Kevin Keegan’s tenure as Manchester City manager.

But this highly risky form of gambling, where you “buy” or “sell” the movement of a market or an index, has recently gained a new following among people that do not have a view on the outlook for Brent Crude, but who do feel they can back their hunches when it comes to property.

Spread-betting on the housing market is a growing craze, with most players speculating that prices in London and the South East are set to slide. This is known as “shorting the market”. The recent wave of betting was sparked by recent warnings of falls in the property market.

The new property spread-betting gang includes women who would never venture inside a high street bookmaker’s shop: you can place your spread-bets online or over the phone. Another attraction is that any profits are tax-free, supposing that you make a profit. The appeal of property market spread-betting also lies in the ability to make money out of bricks and mortar without hassle.

The price to pay for this convenience is that spread- betters who get it wrong can find themselves facing unlimited losses, for which there is no compensation.

IG Index, the spread-betting firm, prices its property market bets using data from the Halifax House Price Survey. Punters can bet on the prices of houses nationally, or in a specific city or region, and have the option of capping their losses.

The firm is predicting that the average price of a London house will fall 5.6 per cent from £244,600 in June to £230,900 next June. But some contrarian gamblers are determined to defy the property pessimists by taking a punt on the market in the capital remaining resilient. IG does remain confident that the Scottish market will stay buoyant, with average prices climbing from £95,700 to £102,400 by next September, a rise of 7 per cent.

As we explain below, the property market is just one area in an ever-increasing range of spread-betting opportunites. All are complex and dangerous. Anyone who cannot afford to lose money should read and marvel, but stay away.

Currencies

Currency trading is becoming more popular, according to such firms as Finspreads and Capital Spreads. Simon Denham, of Capital Spreads, says: “Spread-betting on currencies is as close as private investors can get to trading the inter-bank rates used by financial institutions.”

Further information can be found on websites such as onewaybet.com.

Binary bets

Although technically not a spread-bet, binary bets are the latest craze among clients at IG Index. Structured to give gamblers the chance to profit from short-term market fluctuations, a binary bet is typically placed on the probability of movements in markets such as the FTSE 100 index. This may sound simple, but the workings of the binary bet system are anything but.

IG Index will take a view on how likely it is that the FTSE 100 will move in a certain direction. Odds of 50 per cent imply that the market will stay flat. If the firm offers a 90 per cent chance that the index will rise, this means that it is likely that the index will close higher. Say the FTSE 100 has been 11 points up all day, suggesting that the market will close at a higher level than the previous day, IG Index could decide that there is a chance of between 6 per cent and 9 per cent that the index will fall and close at a lower level. If you believe that the firm is wrong, and the index will fall, you buy at 9 per cent.

If, after you have made your bet, the FTSE 100 falls, IG will change its odds. The firm now believes there is a 40 per cent chance of the index finishing lower than the previous day. Your profits will derive from the difference between the original 9 per cent chance and the new 40 per cent chance.

US stocks

Spread-betters have been looking at US shares for opportunities in volatile stocks. Google, the internet search engine, has topped the list of must-have stocks after its flotation on Nasdaq. Will Armitage, of IG Index, believes that many spread-betters realised the potential of US stocks when they saw investors shorting Google shares in the unofficial grey market before the company’s flotation last month.

Cantor Index, another spread-betting firm, says that the recent upturn of the S&P 500 and Dow Jones industrial average has buoyed gamblers, with Wal-Mart, Sears and Nike all attracting attention.

If this all seems too complicated, then Cantor Index is taking fixed-odds bets on the possibility of four different events taking place during Manchester City’s match at Crystal Palace today. Will City win? Will David James keep a clean sheet? Will Nicolas Anelka score? And will Danny Mills be seen hugging Kevin Keegan at the final whistle on Match of the Day.